BlackRock, the world's largest asset manager, is aiming to expand its foray into the digital asset industry following the successful launch of its Spot Bitcoin and Ethereum ETF in 2024. US asset management companies are trying to promote the use of their own money as a new business. Market token BUIDL as a collateral asset in the virtual currency derivatives market.
BlackRock’s BUIDL functions as derivative collateral: report
BlackRock has started selling BUIDL as collateral in the crypto derivatives market, Bloomberg reported on Friday. For context, BUIDL (short for BlackRock USD Institutional Digital Liquidity Fund) is a tokenized fund issued on the Ethereum blockchain that provides institutional investors access to achieving US dollar yields.
Like stablecoins, BUIDL is pegged to a stable value of $1 per unit and invests in assets such as the U.S. dollar, U.S. Treasury bills, and repurchase contracts. Since its launch in March, BUIDL has experienced impressive growth, amassing $550 million in total assets under management, making it the largest tokenized fund on the market.
To facilitate further growth for BUIDL, BlackRock is collaborating with its broker, Securitize, to connect major exchanges such as Binance, OKX, and Deribit with collateral assets for derivatives trading on their respective exchanges. He said that he has started discussions to introduce a money market token. platform.
BlackRock aims to charge traders a 0.5% management fee in line with its current standard policy. However, use of BUIDL is restricted only to qualified institutional investors with a minimum investment limit of $5 million.
Currently, crypto prime brokers such as FalconX and Hidden Road have already authorized their clients to use BUIDL as a collateral asset for their trades. However, the potential entry of powerful exchanges such as Binance and OKX into the derivatives market presents a significant opportunity to exponentially increase the market influence of tokenized discovery.
BlackRock challenges USDT's dominance in derivatives trading
BlackRock will face strong opposition from Tether's USDT, which ranks as the most common collateral asset in the cryptocurrency derivatives market, when it launches BUIDL in cryptocurrency derivatives trading. USDT is the world's largest stablecoin and the third largest cryptocurrency with a market capitalization of $120 billion.
At this time, there have been no positive comments from BlackRock or the aforementioned crypto exchanges regarding plans to introduce BUIDL in cryptocurrency derivatives trading. However, if the initiative is successfully executed, it will be another outstanding milestone in the investment firm's digital asset campaign.
BlackRock has already announced the largest Spot Bitcoin ETF and Ethereum ETF with net assets of $25.79 billion and $1.26 billion, respectively, according to SoSoValue data. By securing collateral in the crypto derivatives market, which generated nearly three-quarters of September's crypto trading volume, BlackRock could expand its power in the digital asset industry.
Featured image from Investopedia, chart from Tradingview
